I-T to scrutinize high-value farm income
With Modi's new demonetization move, reports stated that high amounts of farm income that are deposited with banks as farm income will be scrutinized by the tax department. This move is set to combat large deposits that evade tax by being masked as farm income. The authorities will check if the deposits are proportional to the farm's income, and question any irregularities, reports said.
Agricultural income and tax laws
Under India's income tax laws, agricultural income and income generated through farm businesses are exempt from taxes. Income from agricultural land, rent received from land, income from agricultural processing and produce, and sales of agricultural produce are deemed as farm income. Income that has been earned through nursery operations are also pitched to be exempted from tax.
Higher agricultural income exemption alerts tax authorities
Earlier this year, the Central Board of Direct Taxes (CBDT) directed tax officials to verify the authenticity of those individuals and organizations claiming tax exemptions under agricultural income. Tax authorities were asked to scrutinize agricultural income claims that were over Rs.1 crore placed by taxpayers in their income tax returns. Over the last decade, allegations on agricultural income being used for money laundering surfaced.
Agricultural income exemption sees corruption grow
"Taxpayers wishing to convert black money into white show proof of ancestral property in villages. They also obtain fictitious receipts from traders of agricultural commodities as evidence that they have produced and sold agricultural produce," a CBDT official said.
Congress fights back against new move
"They are trying to introduce a back door entry for taxing agriculture income. Such a decision has never been taken before. It exposes their mindset because when farmers committed suicide, they did not bother and now they want to do this," said Congress' spokesperson.